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2014 Federal Budget Announced but a lot of Questions Remain Unanswered

14 May 2014

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2014 Federal Budget Announced but a lot of Questions Remain Unanswered

The official release of the 2014 Budget by the Federal Government last night has made the anticipated cuts and mergers a reality, consistent with the Coalition’s commitment to bringing the budget back to surplus and streamline government operations.

But the increased spending on border protection shows a change in focus away from the traditional role and identity of Customs in Australia, creating uncertainty for industry.

Customs and Immigration merger

Further to our eAlert on Friday 9 May 2014, to better manage services at Australia’s borders, the merger between the Australian Customs and Border Protection Service (“Customs”) and the Department of Immigration (which will include the creation of the Australian Border Force) will cost $480.5 million with 480 jobs lost.

According to Immigration Minister Scott Morrison, this will include the movement of policy, strategy, planning, trade facilitation and customs services officers from Customs to the new Department of Immigration and Border Protection and the establishment of a training college for officers.

This significant commitment is inconsistent with the substantial cuts to almost all Federal Government functions and the Government’s focus back to “small government”.

With a focus on enforcement and border protection key to the merger, there are still a lot of unanswered questions. Mr Pezzullo (the CEO of Customs) said that the ABF “will draw together the operational border, investigations, compliance, detention and enforcement functions of our service and the Department of Immigration and Border Protection,” and that “Policy, regulatory and corporate functions will combine within the broader department.”

There has been little discussion on the how this will affect the more traditional (albeit the less exciting) functions of Customs such as tariffs, import and export controls, reporting and revenue collection. However, the Customs portfolio Budget Statement has announced a commitment to design a trusted trader programme to foster legitimate trade.

Nonetheless, the merger will now rank Customs alongside the Australian Federal Police, ASIO and the Defence Force, which represents a change in focus, evident with the removal of the words “Customs” and “Service” in the new title of the Department of Immigration and Border Protection.

Merger of Commonwealth tribunals

Consistent with the speculation leading into the announcement of the 2014 Budget, there have been cuts to 36 government agencies. This includes the merger of the Australian Administrative Appeals Tribunal (“AAT”) with the Social Security Appeals Tribunal, Refugee Review Tribunal, Migration Review Tribunal and Classification Review Board. The single body will retain the name of the AAT, which should not impact those in the trade and transport environment too heavily in their day to day operations. However, we are yet to see how this will work with the new ABF.

National Audit Report recommendations

In addition to these mergers, the Budget has addressed a number of other issues identified by the National Commission of Audit’s Report (“Report”). While the Report recommended abolishing Austrade and the Export Finance & Insurance Corporation, this has not been done in the budget.

However, the budget will deliver on a number of industry assistance programmes that the Report recommended to be cut (where there to be no genuine market failure deemed and where benefits accrue entirely for the Government largely to the firm or industry supported) with the closure of the Automotive Transformation Scheme and the Ethanol Production Subsidies to name a few.

Subsidies for small business exporters

Despite the large cuts to almost every facet of the Federal Government’s functions, Agriculture Minister Barnaby Joyce has secured $15 million for small business exporters so that they may remain competitive and profitable internationally.

Those in the meat, dairy, fish, horticulture and grain industries will be able to apply for a rebate in of up to $5000 in 2014-15, which will cover 50% of export registration charges.

Finalising the budget

Of course, all of these changes still need to be passed through Parliament, including the Senate (of which the Government does not have control). So it remains to be seen whether politically all of these changes can be achieved.